Tuesday 19 February 2019, the ACCC released its regular quarterly analysis of
average petrol prices in Australia.
discussing fuel prices during the financial quarter ending 31 December 2018
stated that “daily average prices
peaked at 10-year highs of 159.9 cents per litre (cpl) in late-October 2018,
before dramatically falling by more than 40.0 cpl to 119.2 cpl by the end of
ACCC went on to state that the key driver of petrol price volatility during the
quarter was movement in international crude oil and refined petrol prices with
prices peaking in October 2018 and then falling sharply during December 2018
due to concerns about global over supply.
net result was that average petrol prices in Australia’s five major capital
cities (Sydney, Melbourne, Brisbane, Perth and Adelaide) in December 2018 fell
to 15-month lows.
prices in the smaller capital cities (i.e. Darwin, Hobart and Canberra) and
Regional areas did not drop as rapidly, but the ACCC noted that all these
locations continued to experience steady falls in average petrol prices during
fact that there is a longer lag in petrol price movements in the smaller
capital cities and regional markets is pretty typical of lower volume markets,
but the fact is that all of Australia has now benefited by the fall in
international crude oil and refined product prices that occurred during the
December quarter”, said ACAPMA CEO Mark McKenzie.
that does not appear to have stopped politicians in two of Australia’s smaller
State/Territory markets from calling for greater scrutiny of our industry”,
this month, the ACT Opposition Leader and ACT Greens Leader called for a pubic
inquiry into petrol prices in Canberra noting that they were the highest in the
country. The calls were supported by several articles in the Territory’s main
newspaper – the Canberra Times – with statements that Canberra had the highest
average petrol prices in the Country.
suggestion of highest capital city prices is likely to have come as a
significant surprise to people living in Darwin and Hobart who, like Canberra,
tend to experience high average petrol prices because of their market size and
evidence does not support the public claims made with Canberra’s average petrol
prices being entirely consistent with the characteristics of the three smaller
capital city markets that exist in Australia”, said Mark
the debate continued regardless of the facts and the ACT Chief Minister
eventually bowed to the political pressure by calling an Inquiry into petrol
prices in Canberra”, said Mark
The principal matters to be
addressed by the ACT Legislative Inquiry into petrol prices have been listed as
price methodology and key determinants;
of the ACT fuel market, including historical changes;
impact of fuel prices on the ACT community;
for significant pricing discrepancies within the ACT and when compared to other
Australian communities and capital cities;
of best practice approaches and initiatives in other jurisdictions which have a
meaningful impact on reducing fuel prices; and
and legislative solutions and barriers, particularly around competition and
Submissions to the inquiry close
on 11 March 2019 and the Committee is required to report to the Assembly
by Thursday, 6 June 2019.
has already met with a number of members of the ACT Legislative assembly in
respect of petrol prices and will be providing a formal submission to the
Inquiry”, said Mark
these inquiries are an inconvenience to our industry on the one hand, they do
provide an opportunity for a more informed discussion on the factors affecting
petrol prices in specific markets – and so we welcome the Inquiry”, added Mark
in Tasmania there some State and Federal politicians have been making spurious
statements about petrol prices and advancing outrageous actions in respect of
Hobart petrol prices.
member of the Labor opposition has suggested that Tasmania introduce laws
requiring all fuel retailers to disclose their fuel buy price as well as their
retail price on fuel rate boards – basically showing market competitors what
their gross margins are.
is a very dangerous suggestion that could seriously distort market competition
and actually increased average fuel prices for Tasmanian motorists”, said Mark.
this week, a federal Nationals MP issued a media release and launched a
petition calling for a Royal Commission into fuel prices.
such a call is perhaps understandable in the face of the current popularity of
Royal Commissions, the fuel industry is already subject to a level of scrutiny
higher than any other industry in the country due to continuous ACCC oversight
and public reporting – such as the report released by the ACCC earlier this
That is to say nothing of the extensive transparency of fuel retail prices now operating because of industry and State/Territory government initiatives that make petrol prices as visible in the digital space as they are in the physical space.
And today, to top it all off, one of Australia’s notable ex-politicians has launched on attack on the fuel industry claiming that the industry operates on a cartel basis.
Dr Hewson’s criticism appeared somewhat confused as it simultaneously criticises fuel market behaviours, fuel quality standards and links the sale of fuel with the health consequences of tobacco.
Dr Hewson’s attack is extraordinary. It demonstrates a complaint lack of understanding of the metropolitan petrol price cycle, the operation of national fuel quality standards and the structure of competition in the Australian fuel retail industry.
“To describe a market that comprises more than 2000 businesses – many of them small and medium – making independent decisions about retail prices, as being an ‘oil cartel’ is absurd in the extreme”, said Mark.
All of these political interventions over the past fortnight beg a question about the sincerity of public statements being made by politicians at present – all coming in the lead up to a federal election where the two major parties are clambering over each other to demonstrate that they are the champions of addressing rising living costs.
“It is telling to contrast the key messages of the latest ACCC report with the political actions cited above”.
“I really wonder whether any of these politicians have taken the time to read even one of the 38 comprehensive petrol market reports that have been produced in the last 10 years”, said Mark
Perhaps the most favourable assessment of these latest political activities would be that some politicians simply haven’t been following petrol price movements closely enough and are still working with information relating to the high prices experienced in Australia nearly six months ago.
more likely assessment, however, is that some politicians are comfortable
advancing arguments based on the selective use of facts to raise their political
profile on an issue that always grabs a media headline.
Perhaps it is time for politicians to be more responsible with their commentary and recognise that our industry is one that operates with a high level of market transparency, employs more than 70,000 Australians and operates with assets valued in excess of $29B.
“It is incumbent on all of our political leaders to advance positions based on fact in a manner that minimises the risk of unintended adverse economic consequences for all Australians that will likely flow from ill-conceived political and legislative actions”, concluded Mark
“For its part, ACAPMA will continue to promote an increased understanding of the relatively complex market in which we operate and make ourselves available for politicians who are genuinely seeking to understand the characteristics of our market”, concluded Mark